The Higher Education Loans Board (Helb) coffers are empty with thousands of university freshmen failing to get State loans.
Helb executives on Thursday told Parliament it had ran out of cash which is normally given to students from poor households and require financial support to pay for their tuition and upkeep.
The board said the freshmen, who joined public universities in September, will have to wait till the Treasury offers it Sh3 billion for initial disbursement.
“Right now we have 75,000 first-year students that are yet to be funded and we require Sh3 billion to process their applications,” Helb chief finance officer Mary Wachira told the National Assembly Committee on Education during the review of the national budget.
Most universities require full payment of a semester’s fees to admit students and delay in disbursement, therefore, risks forcing some freshmen to postpone their studies.
It added that inadequate allocation and delayed release of cash by the Treasury had triggered the cash crunch amid rising defaults from former university students in the wake of the Covid-19 pandemic that triggered layoffs, business closures and a freeze in hiring.
The agency funds needy students to the tune of between Sh35,000 and Sh60,000 per year, based on their economic background.
Of the total loan disbursed, Sh8,000 is sent directly to the university as tuition fees and the balance to the beneficiary’s bank account in two equal tranches covering the first and second semesters.
The beneficiaries are expected to clear their loans within four years, a pointer of how layoffs and freeze in hiring plans have hit young employees.
Last December, Helb said it had reduced the average amount offered to students for loans from about Sh45,000 to Sh37,000.
Wachira also revealed that for a student to be comfortable they need an annual budget of about Sh200,000.
“Given that Helb provides about Sh37, 000 currently then it means the students or the household has to raise another Sh162,000.”
Helb has over the years struggled to meet rising demand for loans.
The number of government-sponsored students in public universities has grown at the fastest rate in four years as State funding neared the Sh42 billion mark.